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Will a 20% Tax on Sugar-Sweetened Drinks Reduce Obesity?

Research suggests sugar tax could yield high public health returns

It is common knowledge that eating right and exercising regularly are key components of good health. Yet despite growing awareness of the problem, the obesity epidemic is showing no signs of reversing course.

A new study published in the journal PLOS ONE suggests a little financial nudge might be in order, at least in Australia. Researchers examined the potential impact of a 20 percent tax on sugar-sweetened drinks using detailed statistical models.

Only non-alcoholic drinks with added sugar were considered sugar-sweetened beverages in this study. Fruit juices, fruit drinks, energy drinks, milk-based drinks, and cordials were excluded.

"Our modelling scoped the effects over the lifetime of adult Australians alive in 2010," said Dr. Lennert Veerman, a researcher at University of Queensland School of Public Health and first author of the study.

"We found there would be 800 fewer new Type 2 diabetes cases each year once the tax was introduced. After 25 years, about 1600 fewer deaths would occur each year, with heart disease accounting for the largest share of this postponed mortality," he said.

"In effect, Australians would enjoy about 170,000 healthy life years that they would not have otherwise."

The numbers sound promising. However, the idea of a sugar tax might leave a bad taste is some people’s mouths.

It has been argued that taxing food does lead to long-term lifestyle changes that are needed to combat obesity. These sorts of taxes might also unfairly burden the poor, as lower-income consumers spend a greater portion of their income on food and non-alcoholic beverages than the rich. And some assert that food taxes are not justified in the same way as cigarette taxes are because people must eat to survive.

Others have claimed that although this effort might not solve the obesity problem in its entirety, it is still a worthwhile intervention. Then there’s the fact that the poor are most heavily affected by diet-related diseases and could stand to benefit the most from reduced consumption. And it has been argued that, because sugary beverages are not necessary for survival, taxing them is fair game.

A sugary drink tax has already been implemented in several countries including Mexico, France, Hungary, and Finland, and insights into its effects are beginning to emerge.

An analysis of the Mexican sugary drink tax was published earlier this year in the journal BMJ, and the results looked promising. The study showed that, following implementation of a 10 percent tax, purchases of sugary drinks decreased by 12 percent by the end of the first year of the study. Those with lower income had the greatest reductions in purchase of taxed drinks.

Perhaps Australia will follow suit. Although a sugary drink tax is not currently on the political agenda, Dr. Veerman says that his group’s new research findings make a strong case for why it should be considered as part of any tax reform process.